Refund under exemption notification is limited to duty actually paid and the prescribed monetary ceiling

An exemption-refund notification for cement and steel used in tsunami-relief housing was applied strictly to the duty actually paid on eligible goods used in the specified construction, and the refund could not exceed the notification's monetary ceiling of 6% of construction cost or Rs. 9,000 per house, whichever was lower. The Tribunal also accepted a procedural direction that the refund claims be examined on documentary verification and granted if otherwise eligible, because merits were not disputed on that aspect. The commentary confirms that refund under such a scheme is confined to the notification's express terms and supporting proof.

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Issues: (i) whether the refund under Notification No. 32/05 dated 17.08.05 was confined to the duty actually paid on cement and steel used in construction of houses for tsunami-affected persons, subject to the monetary cap prescribed in the notification; (ii) whether the direction of the Commissioner (Appeals) requiring the Assistant Commissioner to process the refund claims and grant refund if otherwise eligible was sustainable.

Issue (i): whether the refund under Notification No. 32/05 dated 17.08.05 was confined to the duty actually paid on cement and steel used in construction of houses for tsunami-affected persons, subject to the monetary cap prescribed in the notification.

Analysis: The notification granted exemption only for cement and steel used in construction of houses in the specified tsunami-affected districts and prescribed a specific mechanism for giving effect to the exemption. It required the manufacturer to pay duty at clearance, and enabled refund only to the approved construction agency on production of proof of duty payment and other prescribed documents. The notification also limited the refund to 6% of the cost of construction or Rs. 9000 per house, whichever was less. On that framework, refund could not exceed the duty actually paid on the goods used for the specified construction, and the authorities were correct in restricting refund accordingly.

Conclusion: The claim for higher refund was rejected and the assessee's appeals failed on this issue.

Issue (ii): whether the direction of the Commissioner (Appeals) requiring the Assistant Commissioner to process the refund claims and grant refund if otherwise eligible was sustainable.

Analysis: The Revenue did not dispute the admissibility of refund on merits. The Commissioner (Appeals) therefore only required the Assistant Commissioner to examine the documents filed by the NGO and to grant refund if the claims were otherwise eligible. That direction was upheld by the Tribunal, and the Revenue's objection to the remand-related direction was not accepted.

Conclusion: The direction to process the refund claims was upheld and the Revenue's appeal was dismissed on this issue.

Final Conclusion: The Tribunal sustained the restriction of refund to the duty actually paid on eligible inputs used in the specified rehabilitation construction, while also upholding the direction to process the refund claims on documentary verification.

Ratio Decidendi: Where a refund-exemption notification prescribes a specific method and monetary ceiling for implementation, refund is confined to the terms of the notification and cannot exceed the duty actually paid on the eligible goods; a procedural direction to process claims on verification of documents remains valid where merits are not disputed.

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